PDD Alembic

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PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) - Version 03

CDM Executive Board

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CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD)

Version 03 - in effect as of: 22 December 2006

CONTENTS

A. General description of the small scale project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders comments

Annexes

Annex 1: Contact information on participants in the proposed small scale project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring Information

Annex 5: Supportives

Enclosure 1 : IRR Calculation


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Revision history of this document

VersionNumber

Date Description and reason of revision

01 21 January

2003

Initial adoption

02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflectguidance and clarifications provided by the Board since

version 01 of this document.

As a consequence, the guidelines for completing CDM SSCPDD have been revised accordingly to version 2. The latest

version can be found at

.03 22 December

2006 The Board agreed to revise the CDM project design

document for small-scale activities (CDM-SSC-PDD), taking

into account CDM-PDD and CDM-NM.


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SECTION A. General description of small-scale project activity

A.1 Title of the small-scale project activity:

>>

5 MW Wind Power Project of Alembic Ltd at Bhavnagar , Gujarat, India

Version 04,

02nd

November 2007

A.2. Description of the small-scale project activity:

>>

Alembic Limited (henceforth referred to as Alembic in the PDD) was started in 1907 at Vadodara. It is

ISO 9001 and ISO 14001 certified company and one of the Asia's most respected integrated

pharmaceutical companies with manufacturing practices and facilities that conform to WHO GMP

guidelines. Alembic is in the business of improving the quality of life and healthcare in over 75 countries

around the world.

Alembic considers the protection of the environment as its direct responsibility and all its processes and

technologies incorporate this feature. A clean and a green environment is an absolute necessity and

Alembic has ensured this by using renewable energy through the considered project activity of

conceptualization and installation of the 5 MW Wind Power Project to satisfy a part of its energy

requirements.

The group has developed this project keeping in consideration of the funding available under the Clean

Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change.

This is because the project activity qualifies as a CDM project because it would reduce the power

consumption from the electricity grid (Western grid, India) thereby helping in significant reduction of

GHG emissions.

The project activity is also responsible for sustainable economic growth and conservation of environment

through use of wind as a renewable source.

The Project activity would generate 5 MW of electricity with efficient utilization of the available wind

energy through adoption of the latest, efficient and modern technology. The generated electricity was to

displace equivalent electricity procured from Gujarat Urja Vikas Nigam Limited (GUVNL) in the

Panelav and Vadodara plants, shared between the plants in a ratio of 35:65 plant of Alembic Ltd. With


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effect from 1 April 2006 the entire amount of electricity generated will be used to displace an equivalent

amount of electricity from the Vadodara and Panelav plants1, as per the Alembic Limiteds requirements.

M/S Alembic Ltd., Vadodara would have the ownership rights for the project activity and would be the

sole transaction entity with the Executive Board of the United Nations Framework Convention on

Climate Change.

The 5 MW Wind Power Project comprises of Wind Energy Generators (WEGs) each of capacities 1.25

MW supplied by M/S Suzlon Energy Ltd.

The contributions of the project to sustainable development are:

Generation of eco-friendly power;

Conserving fossil fuel reserves in vision of long-term sustainability;

Reducing GHG emissions compared to a business-as-usual scenario;

Reducing other pollutants (SOx, NOx, PM, etc.) resulting from power generation in the grid;

A.3. Project participants:

>>

Name of Party involved ((host)indicates a host Party)

Private and/or public entity(ies)project participants (as

applicable)

Kindly indicate if the Partyinvolved wishes to be considered

as project participant (Yes/No)

India (Host) Alembic Limited (Private

entity)

No

A.4. Technical description of the small-scale project activity:

The technology applied for project activity is the power generation from renewable energy i.e. wind.

The project proponent used the highly efficient technology for wind power generation. The

technology is supplied by Suzlon limited.

A.4.1. Location of the small-scale project activity:

>> The detailed location of the site is shown in the map below:

1GETCO Wheeling Agreement.


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Project

activity site


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A.4.1.1. Host Party(ies):

>> India

A.4.1.2. Region/State/Province etc.:

>> Gujarat

A.4.1.3. City/Town/Community etc:

>> Ukharla, Trambak, District Bhavnagar, PIN 364001

A.4.1.4. Details of physical location, including information allowing the

unique identification of this small-scale project activity :

>>

The project site is located at Ukharla Trambak in the district of Bhavnagar and in the Indian state of

GUJARAT. Bhavnagar is approximately at 250 kms from AHMEDABAD. The site Ukharla has a

latitude and longitude of around 21 34 23.2 N & 72 05 52.1 E respectively. It is located at

approximately 225 meters from the mean sea level. These sites have been identified as ideally suited for

wind power generation based on the studies and data analysis carried out by eminent agencies like M/S

Suzlon Energy Ltd. The feasibility of these sites for wind power production has been established by

Ministry of Non Conventional Energy Sources, Govt. of India

A.4.2. Type and category(ies) and technology/measure of the small-scale project activity:

>>

Type & Category

The project meets the applicability criteria of the small-scale CDM project activity category, Type I:

Renewable Energy Projects (D: Grid connected renewable electricity generation) of the Indicative

simplified baseline and monitoring methodologies for selected small scale CDM project activity

categories

Main Category: Type I Renewable energy projects.

Sr.

No

Turbine Survey number as per Power

Wheeling Agreement with

GETCO

1 S4 46/P1

2 S5 30/P1

3 S6 30/P2

4 S7 30/P3


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Sub Category: D Grid connected renewable electricity generation.

As per the provisions of appendix B of simplified modalities and procedures for small scale CDM project

activities (version 11), Type I D comprises renewable energy generation units, such as photovoltaics,

hydro, tidal / wave, wind, geothermal, and renewable biomass, that supply electricity to and / or displace

electricity from an electricity distribution system that is or would have been supplied by at least one

fossil fuel fired generating unit. The project activity is within the threshold values stated by the

methodology.

The baseline and emission reduction calculations from the project would be based on paragraphs 9 of

AMS-I.D (version 11) and the monitoring methodology would be based on guidance provided in

paragraph 13 of AMS-I.D.

Technology

Alembic has procured the Wind Energy Generators (WEGs) from Indian company M/S. Suzlon Energy

Ltd. The technology is a clean and safe technology since there are no GHG emissions associated with the

electricity generation.

A direct grid-connected high-speed horizontal axis generator, in combination with the multiple-stage

combined spur / planetary gearbox delivers harmonics-free and grid-friendly power. The technical details

of the WEG are as follows:

Operating DataS.64/1250

(50 Hz)

Rotor diameter 64 m

Hub height 65 m (variable as per requirement)

Installed elec. Output 1250 kW

Cut-in wind speed 3 m/s

Rated wind speed 12 m/s

Cut-out wind speed 25 m/s

Survival wind speed 67 m/s

RotorS.64/1250

(50 Hz)

Blade 3 bladed horizontal axis


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Swept area 3217 m

Rotational speed 13.9 / 20.8 rpm

Regulation Pitch-regulated

GeneratorS.64/1250

(50 Hz)

Type Asynchronous 4/6 poles

Rated output 250 / 1250 kW

Rotational speed 1006/1506 rpm

Frequency 50 Hz

GearboxS.64/1250

(50 Hz)

Type Integrated (1 planetary & 2 helical)

Ratio 74.917 : 1

Yaw SystemS.64/1250

(50 Hz)

Drive 4 electrically driven planetary gearboxBearings Polyamide slide bearings

Braking SystemS.64/1250

(50 Hz)

Aerodynamic brake 3 independent systems with blade pitching

Mechanical brake Hydraulic fail-safe disc brake system

Control UnitS.64/1250

(50 Hz)

Type

Programmable microprocessor-based; high speed data

communication, active multilevel security, sophisticated operating

software, advance data collection remote monitoring & control

option, UPS back up, Real time operation indication

TowerS.64/1250

(50 Hz)


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Type Lattice / Tubular, Hot Dip Galvanized, Epoxy / PU coated

ErectionS.64/1250

(50 Hz)

Type With crane

The salient features of the WEGs are as follows:

Higher Efficiency

Designed to achieve increased efficiency and co-efficient of power (Cp)

Minimum Stress and LoadStatic stresses are taken care of by a well-balanced weight distribution design while wind

induced dynamic radial loads are picked up by the separate main shaft bearing, which is

integrated into the gearbox housing.

Shock Load-free Operation

Peak loads are compensated by a torque adjustable advanced hydrodynamic fluid coupling which

also acts as an excellent vibration separation and shock-dampening device.

Intelligent Control

Next gen technologies applied by extensive operational experience maximizes yield

Maximum Power Factor

High-speed asynchronous generator with a multi-stage intelligent switching compensation system

delivers power factor up to 0.99

Climatic Shield

Hermetically sheltered against thermal stresses, moisture, salinity, dust, snow, lightning strikes

and extreme wind conditions, advanced over-voltage and lightning protection system

Unique Micro-Pitching Control

Unmatched fine pitching with 0.1 resolution to extract every possible unit of power

Grid-friendly

Grid friendly design generates harmonics-free pure sinusoidal power

The WEG is designed according to the Germanischer Lloyd (GL) design standards.

A.4.3 Estimated amount of emission reductions over the chosen crediting period:

>>

The project activity would result into CO2emission reduction of 89698 tons for 10 years crediting

period.


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Years Annual estimation of emission reductions in tonnes

of CO2-e

20089247

20099247

20109247

20119247

20128785

20138785

2014 8785

20158785

20168785

20178785

Total estimated reductions (tonnes of CO2e) 89698

Total no of crediting years 10

Annual average over the crediting period of

Estimated reductions (tonnes of CO2e)

8969

A.4.4. Public funding of the small-scale project activity:

>>

No public funding from parties included in Annex I to the UNFCCC, is available to the project.

A.4.5. Confirmation that the small-scale project activity is not a debundled component of a

large scale project activity:

According to appendix C of simplified modalities and procedures for small-scale CDM project activities,

debundling

is defined as the fragmentation of a large project activity into smaller parts. A small-scaleproject activity that is part of a large project activity is not eligible to use the simplified modalities and

procedures for small-scale CDM project activities.

According to para 2 of appendix C2

2Appendix C to the simplified M&P for the small-scale CDM project activities,

http://cdm.unfccc.int/Projects/pac/ssclistmeth.pdf


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A proposed small-scale project activity shall be deemed to be a debundled component of a large project

activity if there is a registered small-scale CDM project activity or an application to register another

small-scale CDM project activity:

With the same project participants;

In the same project category and technology/measure;

Registered within the previous 2 years; and

Whose project boundary is within 1 km of the project boundary of the proposed small- scale

activity at the closest point

Since there is no small-scale activity registered and/or applied for registration in the name of project

participant, which belongs to any of the categories of small-scale CDM project or meeting any of the de-

bundling criteria stated above, the Alembics project activity therefore considered as small scale CDM

project activity.


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SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology applied to the

small-scale project activity:

>>

The methodology used for this project is I. D. Grid connected renewable electricity generation

(version 11)under the small scale methodologies Type I Renewable energy projects.

For calculation of the combined margin baseline emission factor, the approved consolidated baseline

methodology ACM0002 Consolidated baseline methodology for grid-connected electricity generation

from renewable sources, Version 06 is applied.

For additionality

Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project

activities; Indicative simplified baseline and monitoring methodologies for selected small-scale CDM

project activity categories

Reference:http://cdm.unfccc.int/methodologies/SSCmethodologies/AppB_SSC_AttachmentA.pdf

B.2 Justification of the choice of the project category:>>

As per the provisions of simplified modalities and procedures for small scale CDM project activities

(version 11), Type I. D comprises renewable energy generation units, such as photovoltaics, hydro,

tidal/wave, wind, geothermal, and renewable biomass, that supply electricity to and/or displace electricity

from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired

generating unit. If the unit added has both renewable and non-renewable components (e.g.a wind/diesel

unit), the eligibility limit of 15 MW for a small-scale CDM project activity applies only to the renewable

component. If the unit added co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit

of 15 MW.

Project activity meets the applicability conditions of the methodology in following manner:

S. No. Methodological requirement Justification

1 This category comprises renewable energy

generation units, such as photovoltaics, hydro,

tidal/wave, wind, geothermal and renewable

biomass, that supply electricity to and/or

displace electricity from an electricity

The project is a wind mill project hence

applicable to this category. Due to

project activity, there is an equivalent

displacement of electricity (which is

generated by fossil fuel) by renewable


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distribution system that is or would have been

supplied by at least one fossil fuel fired

generating unit.

source (wind) by using WTG

technology.

2 If the unit added has both renewable and non-

renewable components (e.g.. a wind/diesel

unit), the eligibility limit of 15MW for a small-

scale CDM project activity applies only to the

renewable component. If the unit added co-fires

fossil fuel1, the capacity of the entire unit shall

not exceed the limit of 15MW.

There is neither non-renewable

component added, nor co-firing is

required for the proposed project

activity. The renewable project capacity

is 5 MW, well below the limit of 15

MW.

3 Combined heat and power (co-generation)

systems are not eligible under this category.

Not applicable. This project is not a

Combined heat and power (co-

generation) systems. Project activity is

displacing partial grid power (which is

dominated by fossil fuel) by renewable

source (wind) by using WTG

technology

4 In the case of project activities that involve the

addition of renewable energy generation

units at an existing renewable power generation

facility, the added capacity of the units added by

the project should be lower than 15 MW and

should be physically distinct from the existing

units.

Not applicable, the entire windmills are

new and this project is not capacity

enhancement or up gradation project.

5 Project activities that seek to retrofit or modify

an existing facility for renewable energy

generation are included in this category. To

qualify as a small scale project, the total output

of the modified or retrofitted unit shall not

exceed the limit of 15 MW.

Not applicable. This project is not a

retrofit or modification of existing

facility.


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B.3. Description of the project boundary:

>>As per the methodology, the project boundary encompasses the physical, geographical site of the

renewable generation source.

In this project the project boundary would include the WEGs, main transformer, sub station, western

region grid and the power receiving plant

B.4. Description of baseline and its development:

>>

The baseline methodology has followed the one specified under Project Category I.D. in Appendix B of

the Simplified M&P for small scale CDM project activities.

All existing sources of power generation have been considered from various sources like the WREB web-

site, CEA web-site and other power related websites. Percentage share of power generation from

different fuel sources has been calculated. The IPCC emission factors for different sources of power

generation have been considered.

The NET BASELINE EMISSION FACTOR as per COMBINED MARGIN (ACM002 Ver06)

Calculation of Operating Margin

Based on CEA data3

3http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm

Project

BoundaryPLANTs (Vadodara & Panelav)

Wind mills S4, S5, S6, S7

Ukharla

WR GRID


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2003-04 0.990

2004-05 1.012

2005-06 0.993

Average 0.998

Build margin

2005-06 0.630

Emission factor = (0.75 x OM + 0.25 x BM)

= (0.75 x 0.998 + 0.25 x 0.63)

= 0.906 kg CO2/kWh

The baseline calculations are CEA data base CENTRAL ELECTRICITY AUTHORITY: CO2

BASELINE DATABASE.

B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below

those that would have occurred in the absence of the registered small-scaleCDM project activity:

The project reduces anthropogenic emissions of greenhouse gases by sources below those that would

have occurred in absence of the proposed CDM project activity.

As per the decision 17/cp.7 Para 43, a CDM project activity is additional if anthropogenic emissions of

greenhouse gases by sources are reduced below those that would have occurred in the absence of the

proposed CDM project activity.

Barriers and Additionality

Referring to attachment A to appendix B document of indicative simplified baseline and monitoring

methodologies for selected small scale CDM project activity categories, project participants are required

to provide a qualitative explanation to show that the project activity would not have occurred anyway, at

least one of the listed elements. should be identified in concrete terms to show that the activity is either

beyond the regulatory and policy requirement or improves compliance to the requirement by removing

barrier(s); The guidance provided herein has been used to establish project additionality. The barriers

that were considered are listed below:

a) Investment barrier

b) Technological barrier

c) Barrier due to prevailing practice

d) Other barriers


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The following section addresses some barriers faced by Alembic to implement the new retrofit

technology in their plant.

Investment Barrier

The power situation in India is particularly grim due to reliance on financially weak State Electricity

Boards. The situation is particularly acute in Gujarat state. According to a study done by a premier

institute4, captive power generation in 2002 amounted to 20% of total electricity produced in Gujarat, a

response to the poor quality supply from GEB. In the year 2003, Alembic decided to go ahead with

implementation of wind turbine generators to meet power demand in its manufacturing units. The source

of finance for the project was 70% from loan and 30% from internal accruals5. The decision on the

project was based on CDM revenues and the same is reflected from management note6.

To have self reliance on electricity, Alembic went ahead with analyzing different alternative captive

power options. It could have either continued to use current generation mix of electricity or set up a

captive unit based on coal or diesel7. There was also an option going for WTGs considering CDM

benefits to achieve project approval.

The project proponent identified the following options as the source of power to meet its electrical

energy requirement

Alt 1: Continuation of current practice

Alt-2: Thermal power plant based on lignite / coal as fuel.

Alt-3: Captive power plant based on Natural Gas

Alt-4: Energy generation using renewable source of wind power.

Continuous of current practice: This option was the cheapest option for the project proponent. In this

option there was no capital investment was requirement. Other than no capital investment there was no

barriers associated with this option because of the project proponent was already using these options.

Therefore this option was one of the baseline scenario for proposed project activity.

4Captive Power Plants: Case Study of Gujarat, India

5Estimated sources of finance V.H.Gandhi and CO. (Charted Accountants), dated 20/04/2006.

6Capital Expenditure Authorization dated 02/04/2003.

Copy of resolution passed by the Board of directors of the company in its meeting held at Vadodara dated

24/07/2003.

7Alembic was having three type of power sources during the decision making process:

1. Grid electricity

2. Natural gas based cogeneration turbines

3. Diesel generating (DG) set (It was used in emergency conditions)


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Coal based power generation may be a preferred option for the project proponent for the reasons

It is the most economical option for generating electrical power. Technology is available in the country,

which are the latest and the most efficient one from these systems. The load factor is a certainty with

these power plants and is the highest. Coal based captive power generation is preferred option in state of

Gujarat. Captive power plants based on natural gas was another option for the alembic as they were

already using the natural gas based turbine generators. This was not feasible due to unavailability of

Natural Gas. The letters for declining gas is submitted to DOE.

Alternatively Alembic could also invest into wind energy and wheel the power to its manufacturing unit.

Although this wasnt the best possible option to meet power requirements, however after considering

CDM benefits, a decision to invest in wind energy was taken. Wind energy is clean energy as there is no

GHG emission from it and this makes it an option for the project proponent. The board approval is

submitted for same.

Out of various options available to the project promoter wind is not the most attractive option to generate

power. Though wind energy is a clean energy, it is a costlier option, especially in India where availability

of coal is abundance. Due to high capital cost & low PLF per unit power generation cost is higher

compared to other fuel options such as coal or diesel/FO. A comparative study of costs of electricity

generation from different alternatives of power production is given below.

S No. Source Power Generation cost/ kWh

Alt-1 Coal Rs 2.27/ kWh

Alt-2 Fuel Oil Rs 3.57/ kWh

Alt-3 Wind Energy Rs 4.24/ kWh

Reference Nagda hills Registered wind PDD (Annex 4)

Also according to the World Energy Council report8Indias Energy Scenario In 2020 wind remains a

costly option to generate power than other conventional fossil fuel based sources. Wind power projects

provide lower IRR as these projects entail high project cost and low PLF. To promote these technologies state

government provides incentives like accelerated depreciation, wheeling of power to user etc, however even

with these incentives the return from wind energy projects is lower than that from the other generation options.

The above unit generation cost is can be cross verified with one other study available for the Gujarat.

According to one study9in Gujarat for the same period the following results are obtained:

8INDIA'S ENERGY SCENARIO IN 2020 by SARMA, E.A.S., Secretary, Ministry of Power, Government of India;

MAGGO, J.N., Joint Adviser, Planning Commission, Government of India

SACHDEVA, A.S., Deputy Adviser, Planning Commission, Government of India

9Captive Power Plants: Case Study of Gujarat, India, P.R. Shukla, Debashish Biswas, Tirthankar Nag,

Amee Yajnik, Thomas Heller and David G. Victor, Working paper.


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Fuel Type Installation cost (million rupees

per MW)

Generation cost (rupees per

unit)

Lignite 50 - 52.5 1.59 1.90

Coal 42.5 45 1.78 1.92

Natural Gas 42.5 - 50 2.3 - 3.3

Wind 40 > 510

According to the analysis the lignite and coal based power plats were the best options for the Alembic.

The project proponent would have opted for the coal and lignite based power plant in absence of the

project activity. Looking forward the environmental benefit and CDM revenue project proponent decided

to go for the wind energy. Although the IRR for wind power project was well below the weighted

average cost of capital of alembic power. The same is discussed below in details:

Before accepting any project, the finance department at Alembic conducts a thorough evaluation of the

project. The Internal Rate of Return (IRR) for the project is calculated and then compared with the

annualized Return on Capital. Specifically for the wind mill project previous three years annualized

Return on Capital was considered. The project activity commenced on 01 June 2003, hence the Return on

Capital for this project would be considered for the years 2000 01; 2001 02 and 2002 03.

Following is the detailed calculation for the return on capital for the above mentioned years:

2000 2001 2001 2002 2002 2003

Equity + Free reserves 10.57 % 5.49 % 8.69 %

Borrowings 8.77 % 7.55 % 6.68 %

Total 19.34 % 13.04 % 15.37 %

Average Return on Capital 15.92 %

10Comparison of options for distributed generation in India


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Table 8: Barrier analysis

Alternative scenario Investmentbarriers

Technologicalbarriers

Barriers due toprevailing

practices

Other barriers

Alt 1: Continuation of

current practice

No initial capital

investment

required. In the

absence of the

project activity

this is a most

likely scenario.

No technological

barriers. The

plant will operate

with this scenario

in absence of the

project activity.

This is the

prevailing

practice. No

barriers.

No

Alt-2: Thermal power

plant based on lignite /

coal as fuel.

Initial capital

investment.

May be

technological

barriers, project

proponent is not

having

experience for

operation of

coal/lignite based

power plant.

There will not be

any barrier due to

prevailing

practice because

this is prevailing

practice in

Gujarat.

No

Alt-3: Captive power

plant based on Natural

Gas

Capital

investment

No Not possible due

to unavailability

of natural gas.

No

Alt-4: Energy

generation using

renewable source of

wind power.

Huge capital

investment

May be

technological

barriers, project

proponent is not

having

experience for

operation of wind

power plant.

The project

activity was first

in the region.

No

It is clear that the alternative 1 is the baseline scenario for the project activity as this is facing no barrier.

IRR calculation:

Rangan Banerjee,1


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IRR of the project is calculated as per the standard industrial practice. The project IRR is calculated

based on cash inflow and outflow without the consideration of source of financing (as per tool for

demsonstration and assessment of additionality page 5, footer 6 and Please refer enclosure 1 IRR an CER

calculations submitted along with this document).

For the calculation of Project IRR following assumptions considered:

Basic Data/ Assumptions Unit Value Source

Investment cost Rs Mill/MW 42.40 Suzlon proposal

Capacity MW 5 Suzlon proposal

No of WEG No 4 Based on management decision

Average PLF % 26.48 Calculated based on the

guaranteed generation given by

technology supplier;

conservatively higher based on

the published literature

Grid unavailability % 4 Suzlon proposal

Wheeling Charges % 4 Suzlon proposal, wheeling

agreement

Transmission Losses

(between substation and

WEG)

% 4 Suzlon proposal

O&M for first 4 years % 2 Purchase order given to suzlon

O&M from 4th year % 2 Purchase order given to suzlon

Annual escalation in O&M

after 4 years

% 5 Purchase order given to suzlon

De-rating of equipment

post 5th years

% 5.0 Referred from purchase order

Working Capital (Days Days 100 Based on industry standard


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sale) Days 100

Interest rate % 12 Based on industrial rates

applicable for the project

Minimum alternative tax

(MAT)

% 8 Based on last three years data of

actual tax paid

The IRR of the project is 14.80 % considering the cash inflow as savings due to electricity generated by

wind mills and cash outflow as operational & maintenance cost, insurance cost and interest to be paid on

loan.

When the project was conceived, CDM funds were considered as cash inflow with criteria of cost of

CERs to be 9 Euros per ton equivalent of CO2emission reduction.

After considering the CDM funds the IRR of the project improved to 16.39 % (more than the average

value of return on capital calculated earlier as 15.92 %).

The IRR calculation for the project was based on certain assumptions for considering power cost and on

the actual market conditions. Together these were factored in by finance experts of Alembic Ltd.

The power cost used for IRR calculation was considered as INR 3.67 for the entire life time of theproject. This was done as per the weighted average cost of the power used by the plant in the year 2000-

01, 2001-02, 2002-03. The detailed calculation is submitted here:

Weighted Average

Cost

2002-03 2001-02 2000-01 Reference

Gross generation kWh 77852400 98786250 65358720 Balance sheet

Net unit generated kWh 71233432 90281366 60602136

Auxiliary kWh 6618968 8504884 4756584 Yearly

statement of

power

generation

Total cost for cogen

power generation

INR 312575352 343925225 243461512 As per SAP

standard report


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Quantity of steam

generated

ton/year 191206 229368 202991 Yearly

statement of

power

generation

Steam cost INR/ton 445.0 612 516.0

Steam credit INR 85094888 140368625 104744519

Net cost for power

genration

INR 227480463.

6

203556599 138716993

Unit cost of power

generation

INR/unit 3.19 2.25 2.29

Generation Unit 113012 131784 32290 Balance sheet

Cost per unit INR/unit 8.85 6.02 5.41 Balance sheet

Total cost of power

generation

1000156.2 793340 174689

GEB purchase kWh 27796640 16340053 30575298 Balance sheet

Total amount INR 166960664 135357856 193136177 Balance sheet

Cost per unit of GEB

power

INR/kWh 6.0 8.3 6.3

Gross unit

generated/puchased

kWh 99143084 106753203 91209724

Line loss kWh 1982862 2135064 1824194

Net unit generated kWh 97160222 104618139 89385530

Total cost for power

generation

INR 395441284 339707795 332027859

Weighted average

cost of power

generation/purchase

INR/kWh 4.1 3.20 3.70 3.67 (Average

cost)

The detailed IRR working is submitted as separate excel sheet working and same is attached in PDD.

Sensitivity Analysis


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The project proponent has done sensitivity analysis for the robustness of financial calculation. Plant load

factor of the wind mill is the most important factor in sensitivity analysis. The plant load factor is varied

from 1 to 5% up and down and the following table is prepared for project IRR.

Plant load factor (+) up) / (-) down by Project IRR

+5% 15.70%

+4% 15.52%

+3% 15.34%

+2% 15.16%

+1% 14.98%

0 14.80%

-1% 14.61%

-2% 14.43%

-3% 14.25%

-4% 14.07%

-5% 13.89%

It is clear from above table than the project activity is not crossing the benchmark even after

increasing the PLF by 5%.

Barriers due to prevailing practice

B: Regulatory Risks:

The state of Gujarat has witnessed a growth in wind turbine installations till the year 1998. The Wind

Power sector witnessed nil installation over next four years up to December 2002. The WTGs installed

by alembic were among the first few installed after a slump in investments in the Wind power sector in

Gujarat.

Wind Installations in Gujarat over the years11

:

Years Till

1992

92-

93

93-

94

94-

95

95-

96

96-

97

97-

98

98-

99

99-

00

00-

01

01-02 02-03

Installation

s (MW)

14.5 1.6 10.6 37.7 51.2 31.1 20.1 0 0 0 0 0

11Wind power India-year wise installations statistics http://www.windpowerindia.com/statyear.asp


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As clearly seen the Wind energy installations came to stand still after year 1998 till 2002-03. The slump

in investments was attributed to poor state policy12

as shown below-

Year Policy Remarks

Jan1993 - Sep2001 1. Tariff rate of Rs.1.75/KWH

2. Banking for 6 months as

compared to other states with

banking option of 12 months.

3. No third party sales optionavailable.

Policy attracted investments till

1998, but there after failed to

attract investors due to stagnant

policy.

Oct2001 - Jun2002 1. Tariff rate of Rs.2.25/KWH

2. Wheeling charges doubled

from2%to 4%.

The policy failed to attract

investments and was changed

within 9 months of

implementation.

Jun2002-till date 1. Tariff of Rs.2.60/KWH

2. Banking period again reduced

to 6 months.

A marginal growth in 2002-03

and in 2003-04 was observed

after this policy.

This table shows the irregular and non-conducive nature of government policy. The banking period is

only six months in comparison to twelve months in states of Maharashtra, Tamilnadu and Karnataka. The

tariff in state is among lowest in country13

. Any change in the near future will have effect on the returns

expected by project proponent and thereby added to the apprehensions. Similar policy planning affects

have been observed in other states.

Other barriers

Among all energy sources available wind energy is never considered as base-load option. It is mainly due

to the fact that wind power is infirm and is dependent on a number of factors which are beyond the

control of power producer such as availability of wind, wind velocity and wind direction. The Wind

12Wind Power Policy 2002; Government of Gujarat; Energy and Petrochemicals Department Government

Resolution No.EDA-102001-3054-B Sachivalaya, Gandhinagar. Dated the 28 June, 2002.

13Incentives Declared by the State Governments for Private Sector Wind Power Projects http://www.infraline.com/


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turbines were installed in Gujarat after a gap of four years; this was the first time megawatt class wind

mill was installed in state14

. Since this was first time megawatt class WTG was installed in state the

project proponent had apprehended technical issues relating to new technology. The main technological

barrier apprehended were non-compliance of local components and foreign parts which in a way weakens

the reliability of entire system. Since most of wind farms are located in far flung areas, failures due to

lightning and control system damages are often marred by lengthy repair time and off-line periods.

Apart from above the only available authentic source of wind data for the Sanodar site is the Wind

Energy Resources Survey in India, Vol. V based on the data collected in the period from September 1996

to August 1997.

Based on the same outdated data, Alembic Ltd. was the first company to take a risk and install the wind

mills on project site. In spite of the IRR not being viable without CDM funds, Alembic Ltd. took the risk

of installing the wind mill only because of Alembics commitment towards a clean and green

environment.

Till Alemic Ltd. installed their wind mill on the site, no other organization had taken the risk to install a

wind mill on the site. The fact that Alembic Ltd. was the first to install the wind mills on the site can be

verified by the certificate issued by M/S Suzlon Energy Ltd. stating the same (certificate attached in

annexure V of this PDD).

The wind mill installation by Alembic Ltd. created a demonstration effect for other organizations who

have now started installing their wind mills on the site.

The project faced many barriers during its construction phase like transportation of the raw material and

equipment, installation of the equipment and the auxiliary machinery required for installation of the wind

mills over the mountainous terrain at site location.

B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

>>

The procedure followed for estimating the emissions reductions from this project activity during the

crediting period are as per the following steps which corresponds with AMS-I.D.

The project category is Grid connected renewable electricity generation system hence as per Appendix

B- indicative simplified baseline and monitoring methodologies for selected small-scale CDM project

activity categories, Version- 10 of the simplified modalities and procedures for small scale CDM project

activities (FCCC/KP/2005/8/ADD.1), the proposed CDM project falls under category I.D Grid

connected renewable electricity generation. The applicability of the project activity as small scale as per

approved methodologyAMS I.D (Version 11) has been demonstrated in section B.2

14Wind power India-year wise installations statistics http://www.windpowerindia.com/statyear.asp


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Baseline Estimation:

Baseline methodology for project category I.D has been detailed in paragraphs 7-11 of the approved

small scale methodologyAMS I.D. (Version 11, date: EB31) Paragraph 9 of the approved methodology

applies to this project activity, which states that:

For all other systems, the baseline is the kWh produced by the renewable generating unit multiplied by

an emission coefficient (measured in kg CO2equ/kWh) calculated in a transparent and conservative

manner as:

a) A combined margin (CM), consisting of the combination of operating margin (OM) and build

margin (BM) according to the procedures prescribed in the approved methodology ACM0002.

Any of the four procedures to calculate the operating margin can be chosen, but the restrictions

to use Simple OM and the Average OM calculations must be considered.

OR

b) The weighted average emissions (in kg CO2equ/kWh) of the current generation mix.

Project proponent has opted for option (a) to calculate grid emission coefficient i.e Combined

Margin (CM) consisting of the combination of operating margin (OM) and build margin (BM).

CM has been estimated based on guidance in Baseline section detailed between page no. 4 to

page no. 10 of approved methodology ACM0002, Version 06.

Baseline emissions are calculated as the kWh produced by the renewable generating unit multiplied by an

emission co-efficient for the Western region Grid, calculated in a transparent and conservative manner.

ACM0002 provides two options for calculation of grid emission co-efficient for such project activities:

The baseline emission (BEy in tCO2) is the product of the baseline emission factor (EFyin tCO2/MWh)

times the electricity supplied by the project activity to the grid (EGy in MWh) minus the baseline

electricity supplied to the grid in the case of modified or retrofit facilities (EG baseline in MWh), as

follows:

BEy = (EGy EGbaseline) x EF,y

Since the following project does not involve any modification or retrofit of the existing generation

facility hence EGbaseline= 0


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EFgrid,yis determined as follows:

EFy = 0.75 x EF,OM + 0.25 x EF,BM,

Where

EF, OM, = Operating Margin Emission Factor

EF, BM = Build Margin Emission Factor

1. Calculation of operating margin emission factor for the region based on simple OM

For calculation of operating margin four options are available:

(a) Simple operating margin;

(b) Simple adjusted operating margin;

(c) Dispatch data analysis operating margin;

(d) Average operating margin.

According to ACM0002 / version 06 dispatch data analysis should be the first choice but for the current

project, dispatch data analysis cannot be used because of unavailability of data.

The simple OM method was used as the low-cost/must run resources constitute less than 50% of the total

grid generation of Western and Southern Grid in average of the five most recent years.

The simple OM emission factor (EFOM,simple, y) is calculated as the generation-weighted average emissions

per electricity unit (tCO2/MWh or MU) of all generating sources serving the system, not including low-

operating cost and must-run power plants.

F i, j , y * COEF i,j y

EF, OM =GENj, y

Where:

Fi, j, y -is the amount of fuel i (in a mass or volume unit) consumed by relevant power sources j in

year(s) y, j refers to the power sources delivering electricity to the grid, not including low-

operating cost and must run power plants, and including imports to the grid,


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COEFi,j y -is the CO2emission coefficient of fuel i (tCO2/ mass or volume unit of the fuel), taking into

account the carbon content of the fuels used by relevant power sources j and the percent

oxidation of the fuel in year(s) y, and

GENj,y -is the electricity (MWh or MU) delivered to the grid by source j.

The CO2emission coefficient COEFiis obtained as

COEFi= NCVi* EFCO2,i* OXIDi

Where:

NCVi - is the net calorific value (energy content) per mass or volume unit of a fuel i,

OXIDi - is the oxidation factor of the fuel.

EFCO2 , i -is the CO2emission factor per unit of energy of the fuel i.

2. Calculation of build margin Factor for the region (ex ante):

Build margin can be calculated as the generation weighted average emission factor (tCO 2/MWh or MU)

of a sample of power plant m, as follows:

EF, BM = Fi,m, y* COEFi, m

GENm, y

Where,

Fi,m,,y, COEFi,m are analogous to the variables described for the simple OM method for plants m.

Baseline emission factor (EF y)

The baseline emission factor EFy is calculated as the weighted average of the operating margin emission

factor (EFOM, simple) and the build margin emission factor (EF, BM,), where the weights wOMand wBM, by

default, are 75% wOM and 25% wBM and EF,OM,and EF,BM,are calculated as described in Steps 1 and 2

of consolidated methodology ACM0002 and are expressed in tCO2/MWh or MU.

EF GRID,Y = 0.75 x EF,OM, + 0.25 x EF, BM


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Values for all regional grids for FY 2000-2001 until FY 2005-2006, including inter-regional and

cross-border electricity transfers. (CEA, User Guide: Version 2.0)

BE = EGy * EFgrid

Where:

Egy - is the net quantity of electricity generated by the project in year y, and

EFgrid is the carbon emission factor of the Grid


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For the calculations for emission factor the unit for OM and BM are used in terms of tCO2/GWh and

same is specified under each calculation.

Emission Estimation:

Emission factor= Net Generation * CEF for fuel * Net Heat Rate * Conversion Factor

(tonnes of CO2) (GWh) (tonnes CO2/TJ) (TJ/GWh) (44/12)

Baseline Emission Co-efficient calculation:

Baseline Emission Co-efficient = Total Baseline Emissions / Total Net Generation

(tonnes of CO2/GWh) (tonnes of CO2) (GWh)

The grid emission factor for Indian power sector for the year 2006 has been calculated by CEA.

Emission reduction due to project activity

Emission Reduction = Baseline Emission Project Emission Leakage

As wind power projects fall under clean energy sources for electricity generation, the emission from the

project is taken as zero.

Leakage estimation is also not required.

Therefore:

Grid Emission Factor

Western Regional Grid 906 tCO2/GWh

Baseline emissions or CERs generated by the project are estimated to be:

Baseline Emissions(project) = Grid Emission Factor * Power Generated from the Project

(tons of CO2) (tons of CO2/GWh) (GWh/year)

Steps Description Equation Used Methodological Choices


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1. Procedure followed for

calculating baselineemissions (BE) in line

with ACM0002- version

6.

The baseline emission is calculated as

per equation BEy= EGy* EFy

The EFy has been calculated

using operating and builtmargin emission factor (ex-

ante) taken from CEA

published data.


estimating project

emissions (PE)

No Project emissions


calculating emission

reductions (ER)

The emission reductions are calculated

as per equation ERy= (BE PE)

-

B.6.2. Data and parameters that are available at validation:

(Copy this table for each data and parameter)

Data / Parameter: EF,OM

Data unit: tCO2/MWh

Description: Operating Margin Grid Emission factor

Source of data used: CEA reviews

Value applied: 0.998

Justification of the

choice of data or

description of

measurement methods

and procedures

actually applied :

The value applied is taken from the CEA reviews of three years. The detailed

calculation is shown in the baseline section above.

Any comment: Data will be kept for crediting period + 2 years.

Data / Parameter: EF,BM

Data unit: tCO2/MWhDescription: Built Margin Grid Emission factor

Source of data used: CEA report

Value applied: 0.63


choice of data or

description of

measurement methods

and procedures

actually applied :

The value applied is taken from the plant from CEA reviews.



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Data / Parameter: EF,yData unit: tCO2/MWh

Description: Combined Margin Grid Emission factor

Source of data used: CEA reviews

Value applied: 0.906


choice of data or

description of

measurement methods

and procedures

actually applied :

The value applied is taken from the plant from CEA reviews. The weights used

for calculating combined margin emission factor are 0.75 and 0.25 for

operating margin and built margin respectively


B.6.3 Ex-ante calculation of emission reductions:

>>

Combined Margin Emission Factor:

EFy= 0.75 * EFOM+ 0.25 * EFBM

Applying the values given in section B.6.2 the value of EFy comes out to be 0.906 tCO 2/MWh.

Baseline Emission Calculations:

The baseline emission is calculated as: BEy= EGy* EFy

where,

BEy= Baseline Emissions due to displacement of electricity during the year y (in tons of CO2)

EGy= Net units of electricity substituted in the grid during the year y (in MWh)

EFy= Emission Factor of the grid (in tCO2/ MWh) and y is any year within the crediting period of the

project activity

Applying the values given in section B.6.2 and B.7.1 the value of BE comes out to be 9247 tCO 2.

Emission Reduction Calculations:

ER = BE - PE

Applying the values given in section B.6.2 and B.7.1 the value of ER comes out to be 9247 tCO 2.


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While calculating emission reduction below assumptions was considered:

1. Plant load factor = 26.48% (Suzlon proposal letter)

2. Availability of WTG = 100% for first four years then 95% for remaining crediting period (Suzlon

purchase order)

B.6.4 Summary of the ex-ante estimation of emission reductions:

>>

Year Estimated Project

Activity

Emissions (tonnes

of CO2e)

Estimated Baseline

Emissions (tonnes

of CO2e)

Estimated

leakage(tonne

s of CO2e)

Estimated

Emission

Reduction

(tonnes of

CO2e)

2008 0 9247 0 9247

2009 0 9247 0 9247

2010 0 9247 0 9247

2011 0 9247 0 9247

2012 0 8785 0 8785

2013 0 8785 0 8785

2014 0 8785 0 8785

2015 0 8785 0 8785

2016 0 8785 0 8785

2017 0 8785 0 8785

Total estimated reductions

(tonnes of CO2 e)

0 89698 0 89698

B.7 Application of a monitoring methodology and description of the monitoring plan:

As per the provisions of paragraph 14 of Draft simplified modalities and procedures for small scale CDM

project activities [FCCC/CP/2002/7/Add.3, English, Page 21] the Project participants may use the

simplified baseline and monitoring methodologies specified in appendix B for their project category ifthey meet the applicability criteria of small scale CDM project activity.

Since the project activity is a small-scale CDM project of Type I.D. category, the monitoring

methodology and plan has been developed in line with the guidance provided in paragraph 9 of category

I.D. of Appendix B.

As per the methodology, monitoring shall consist of metering of electricity generation.


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Monitoring plan:

The sole objective of having a monitoring system is to have a constant watch on the emission reductions.

The delivered energy will be metered by Alembic Ltd., Vadodara; Gujarat Energy Development Agency,

Porbandar; GETCO (66 KV S/S), Bhav Nagar; and PGVCL, Mamsa at the high voltage side of the step

up transformer installed at the receiving station. Metering equipment shall be electronic trivector meters.

The metering equipment shall be maintained in accordance with electricity standards and have the

capability of recording half-hourly and monthly readings, which in turn are produced to Alembic Ltd.,

Vadodara. The meters installed should be capable of recording and storing the parameters for a minimum

period of 35 days with digital output. The monthly meter readings at the project sites and the receiving

station shall be taken simultaneously and jointly by the parties.

At the conclusion of each meter reading, an appointed representative of GETCO (66 KV S/S), Bhav

Nagar, PGVCL Mamsa and Gujarat Energy Development Agency, Porbandar will sign a document

indicating the number of kilowatt-hours indicated by the meter.

Each meter shall be jointly inspected and sealed on behalf of GETCO (66 KV S/S), Bhav Nagar, PGVCL

Mamsa and Gujarat Energy Development Agency, Porbandar, in the presence of its authorised

representatives.

All the Main and Check meters shall be tested for accuracy every calendar quarter with reference to a

portable standard meter. As the instruments are calibrated and marked at regular intervals, the accuracy

of measurement can be assured at all times. To ensure accurate and continuous monitoring, Alembic Ltd.

has a standby meter, calibrated by an authorised agency.

The allocation of electricity is executed as per the following procedure:

1. Enter the value of electricity received from W/M at 33 KV (kWh).

2. Enter the value of electricity supplied to W/M at 33 KV (kWh).

3. Take the difference of electricity received and supplied to W/F at 33 KV (kWh).4. Take the total of difference calculated as per step 3.

5. Divide individual difference by total calculated as per step 4 and multiply by 100 to find %.

6. Enter the value of electricity received from W/M at 66 KV (kWh).

7. Enter the value of electricity supplied to W/M at 66 KV (kWh).

8. Take the difference of electricity received and supply to W/F at 66 KV (kWh).

9. Multiply the value calculated as per step 8 by % allocation calculated as per step 5.

B.7.1 Data and parameters monitored:


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(Copy this table for each data and parameter)

Data / Parameter: EGy,

Data unit: MWh

Description: Net units of electricity substituted in the grid

during the year y

Source of data to be used: Joint meter reading.

Value of data 10206.45

Description of

measurement methods

and procedures to be

applied:

Monitoring: Trivector meter will be used for

monitoring

Data Type: measured

Frequency: hourly measuredRecording: Monthly from joint meter

Archiving Policy: Paper & Electronic

Responsibility: Manager (Wind Project) would be

responsible for regular calibration of the meter.

Calibration Frequency: Once a year.

QA/QC procedures to be applied: Yes, Quality Management System will be used and

the same procedures would be available at the

project site. The net electricity exported to the grid

can be cross verified with the sales receipts

received by electricity board.Any comment: Data archived: Data will be archived for two years

after the end of crediting period or of the last

issuance of CERs for this project activity,

whichever occurs later

B.7.2 Description of the monitoring plan:

>>

Roles and responsibilities:

General Manager:In the project management structure General Manager is responsible for the project

management. He is responsible to plan and allocate the annual budget for operation, estimation of the

likely operating cost, electricity dispatch, organizing third party contractors, revenue collection etc.

General Manager will check the monthly electricity generated and annual emission reduction

calculations. He is responsible for any leakage of emissions in the project boundary.

Operation and maintenance of wind generators will be done by Suzlon energy Limited and they will be

responsible to General Manager.

General Manager

DGM

Asst. Manager


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Deputy General Manager: DGM is assisting to General Manager for completing the task discussed

above. He is responsible for the electricity generations at the individual wind turbine installations. He

will crosscheck the log book regularly and report to General Manager for any abnormality.

Sr. Executive/Ass Manager:Sr. Executive/asst. manger is responsible for recording the electricity meter

reading.

Record Handling:OEM contractors are collecting daily report obtained from hourly monitoring with all

the related parameters. All the records are given to General Manager every month. The GM has final

responsibility for record keeping.

Internal Audits and performance review

These records are regularly audited and checked by the senior officials from Alembic Limited during

their visits to the site. The senior officials visit once in a year and audit the records. The officials will

crosscheck the emissions reductions claimed in PDD with respect to actual emissions reduction.

For any deviation from the actual emission reduction values and reported values corrective action will be

suggested by senior official to calculate the conservative emission reduction. All corrective actions will

be recorded in the logbook.

Monitoring and Calibration

As emission reductions from the project are determined by the number of units exported to the grid, it is

mandatory to have a monitoring system in place and ensure that the project activity produces and exports

Direction of flow of information

Internal Audit Team OEM Contractors


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the rated power at the stipulated norms. The sole objective of having monitoring system is to have a

constant watch on the emission reductions.

The delivered energy shall be metered by Suzlon and state electricity board at the high voltage side of the

step up transformers. Metering is done either for two /three / more wind mills depending on the location

of wind mills and service connection number. Metering equipment is electronic trivector meters. The

metering equipment is maintained in accordance with electricity standards and has the capability of

recording hourly and monthly readings. Records of joint meter reading are maintained at site and a copy

is maintained at the head office. All the meters shall be tested for accuracy every calendar year with

reference to a portable standard meter. As the instruments are calibrated and marked at regular intervals,

the accuracy of measurement can be assured at all times. Necessary records of calibration are maintained

by state electricity board.

B.8 Date of completion of the application of the baseline and monitoring methodology and the

name of the responsible person(s)/entity(ies)

>>

Date of completion of baseline: 01/10/2007

Name of person/entity determining the baseline: The baseline has been prepared by Alembic Ltd

(Please refer Annex I for detailed contact information for the person involved in baseline determination).


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SECTION C. Duration of the project activity / crediting period

C.1 Duration of the project activity:

C.1.1. Starting date of the project activity:

>>

The project activity started on 08thJuly 2003 (Date of purchase order released).

C.1.2. Expected operational lifetime of the project activity:

>> Lifetime of the project: 20 y 0 m

C.2 Choice of the crediting period and related information:

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period:

>> Not applicable

C.2.1.2. Length of the first crediting period:

>> Not applicable

C.2.2. Fixed crediting period:

C.2.2.1. Starting date:

>> Starting date of crediting period is 01/01/2008 or date of registration of PDD whichever will be later.

C.2.2.2. Length:

>> 10 years 0 months


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SECTION D. Environmental impacts

>>

D.1. If required by the host Party, documentation on the analysis of the environmental impacts

of the project activity:

>>

This project activity does not fall under the purview of Environmental Impact Assessment notification of

the Ministry of Environment and Forests -Government of India, but due consideration has been given to

environmental aspects. Alembic Ltd., Vadodara already has an Environment Management system in

place. All environmental related issues were identified and necessary steps to mitigate them have been

put in place by the implementation of the Environmental Management system.

D.2. If environmental impacts are considered significant by the project participants or the host

Party, please provide conclusions and all references to support documentation of an environmental

impact assessment undertaken in accordance with the procedures as required by the host Party:

>>

The project activity is wind based power generation and therefore no significant environmental impacts

are envisaged from the project activity.

The impacts are given as follows:

The minor quantity of solid / liquid discharge, generated during the construction phase has no

noticeable impact on soil use and the project proponent had made arrangements to dispose them in an

environmentally acceptable manner.

Wind Power plants are known to contribute to zero atmospheric pollution as no fuel combustion is

involved during any stage of the operation.

The project site is a barren land and unproductive area with no application and habitat. There are no

migratory birds / endangered species in the region of project activity. Therefore, no harm on the

ecological environment is envisaged.

Noise is generated due to the movement of rotor blades. It has no direct effect on the population, as

the area is less populated and noise generated will be attenuated by ambient conditions.

The net impact under environmental pollution category would be positive as all necessary abatement

measures would be adopted and periodically monitored. The project activity does not have any major

adverse impacts on environment during its construction or operational phase.

SECTION E. Stakeholders comments

>>


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E.1. Brief description how comments by local stakeholders have been invited and compiled:

>>Alembic Ltd., Vadodara has put up the 5 MW wind power project in Dist. Bhavnagar (Gujarat). Alembic

Ltd., Vadodara communicated with the relevant stakeholders their plan to implement the 5 MW Wind

Power Project. Representatives of Alembic Ltd., Vadodara approached all the stakeholders seeking their

comments and support for the project.

The identified stakeholders are:

Local government representatives.

Designated National Authority, Government of India.

Ministry of Non Conventional Energy Sources, Government of India. Local villagers

O&M contractors

GEDA

GUVNL

The identified stakeholders were interviewed by relevant officials from Alembic Ltd. to understand their

comments and reactions about the wind mill project. These interviews were recorded and converted in to

a video CD which is available with Alembic Ltd. The stakeholders who were interviewed were asked to

sign a declaration at the time of interview to establish the credibility of the interview. The stakeholdermeeting was conducted on 03-12-2005 for local villagers, O & M contractors. From other stakeholders

letters were obtained and the same has been attached with the PDD. A brief summary of the stakeholder

comments is given in the next section.

E.2. Summary of the comments received:

>>

The local people are direct beneficiaries of the project. The construction and continuous operation of the

mill constituted local manpower. The project does not require any major displacement of any local

population. Also, the installation of transmission lines would not create any inconvenience to the local

population. In summing up, the project activity has received complete support from the local populace.

The government of India, through Ministry of Non-conventional Energy Sources (MNES), has been

promoting energy conservation, demand side management and renewable energy projects including wind,

small hydro and hydro / bio-mass power. This implementation of the wind power project has been highly

appreciated by them.


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The Ministry of Environment & Forests is the Designated National Authority in India. The government

of India, through Ministry of Environment and Forests (MoEF) is encouraging project participants to take

up such Climate Change initiatives.

Stakeholders had no objections from installations of WTGs instead they have openly said that wind

power projects helped to them by

Additional revenue generated thro land / lease to outsiders like contractors & their employees.

Job opportunities for day -to - day maintenance and security of WTGs

Development of roads.

No any adverse impact on rains, agriculture.

E.3. Report on how due account was taken of any comments received:

>>

In summing up, the project has not received any negative or discouraging feedback from the stakeholders

concerned.

All the stakeholders have appreciated and encouraged M/S Alembic Ltd., Vadodara for taking up this

project activity.

In view of various direct and indirect benefits (social, economical & environmental), all the stakeholders

have supported the project activity.


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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: Alembic Limited.

Street/P.O.Box: Alembic Road

Building: -----

City: Vadodara

State/Region: Gujarat

Postfix/ZIP: 390003

Country: India

Telephone: 0091 0265 2280550

FAX: 0091 0265 2281508

E-Mail: [email protected]

URL: http://www.alembic-india.com/

Represented by:

Title: Director & President

Salutation: Mr.

Last Name: Baheti

Middle Name: K

First Name: R

Department: Finance

Mobile: +91 98243 99359

Direct FAX: 0091 265 228 2506

Direct tel: 0091 265 228 5124

Personal E-Mail: [email protected]


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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

No funding from any party is available for the project.


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Annex 3

BASELINE INFORMATION

Western Grid Emission Factors

CENTRAL ELECTRICITY AUTHORITY: CO2 BASELINE

DATABASE15

VERSION 2.0

DATE

21 June

2007

BASELINE METHODOLOGY ACM0002 /

Ver 06

EMISSION FACTORS

Weighted Average Emission Rate (tCO2/MWh) (excl. Imports) Weighted Average Emission Rate

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 0.72 0.73 0.74 0.71 0.71 0.71 North 0.72

East 1.09 1.06 1.11 1.10 1.08 1.08 East 1.09

South 0.73 0.75 0.82 0.84 0.78 0.74 South 0.74

West 0.90 0.92 0.90 0.90 0.92 0.87 West 0.90

North-East 0.42 0.41 0.40 0.43 0.32 0.33 North-East 0.42

India 0.82 0.83 0.85 0.85 0.84 0.82 India 0.82

Simple Operating Margin (tCO2/MWh) (excl. Imports) Simple Operating Margin (tCO2/M

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 0.98 0.98 1.00 0.99 0.97 0.99 North 0.98

East 1.22 1.22 1.20 1.23 1.20 1.16 East 1.22

South 1.02 1.00 1.01 1.00 1.00 1.01 South 1.03

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West 0.98 1.01 0.98 0.99 1.01 0.99 West 0.98


India 1.02 1.02 1.02 1.03 1.03 1.02 India 1.01

Build Margin (tCO2/MWh) (excl. Imports) Build Margin (tCO2/MWh) (not a

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 0.53 0.60 North

East 0.90 0.97 East

South 0.71 0.71 South

West 0.77 0.63 West

North-East 0.15 0.15 North-East

India 0.70 0.68 India

Combined Margin (tCO2/MWh) (excl. Imports) Combined Margin in tCO2/MWh

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 0.76 0.76 0.77 0.76 0.75 0.80 North 0.76

East 1.06 1.06 1.05 1.07 1.05 1.06 East 1.06

South 0.87 0.85 0.86 0.86 0.85 0.86 South 0.87

West 0.87 0.89 0.88 0.88 0.89 0.81 West 0.87


India 0.86 0.86 0.86 0.86 0.86 0.85 India 0.85

GENERATION DATA EMISSION DATA

Gross Generation Total (GWh) Absolute Emissions Total (tCO2)

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 144,292 151,185 155,385 165,735 168,438 179,751 North 97,866,565

East 58,936 64,048 66,257 75,374 85,776 93,902 East 58,026,488

South 129,035 131,902 136,916 138,517 144,086 147,355 South 89,019,263

West 162,329 165,805 177,399 172,682 183,955 188,606 West

135,192,15

3

North-East 5,319 5,332 5,808 5,867 7,883 7,778 North-East 2,202,108


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East 10,670 11,619 11,968 13,686 15,594 17,203 East 489

South 24,232 24,726 25,558 25,675 26,935 27,666 South 1,162

West 30,082 30,625 32,890 31,956 34,145 35,201 West 321

North-East 1,039 1,043 1,134 1,150 1,552 1,531 North-East 0

India 93,069 96,296 100,498 103,475 109,685 115,241

Net Generation in Build Margin (GWh) Share of Net Imports (% of Net G

2000-01 2001-02 2002-03 2003-04

2004-

05

2005-

06 2000-01

North 32,064 34,340 North 0.0%

East 15,818 17,567 East 0.9%

South 27,987 28,158 South 1.0%

West 35,257 35,425 West 0.2%

North-East 2,055 1,793 North-East 0.0%

India 113,181 117,283


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Annex 4

MONITORING INFORMATION

Sr.

no.

Data

description

Procedure for

monitoring the

parameter

Traceability of

calibration method/

standard

Tag no OR

equipment

serial no of

instrument

Service & Tech

def. Of instru

and measuring

Make of

instrument

1 Net Electricity

Exported

Secure Metre of

Alembic Ltd. at (33kv)

ERDA DOC. FOR

CALLIBRATION AT

regular interval of 6

Months

GJU03992 Service:

Electrical energy

measurement

Tech. Def:

Energy Meter

Secure Meter

Ltd.

2 Net units of

electricity

substituted

in the grid

during the

year y (in

MWh)(EGy)

Secure Metre of M/S

GETCO at (66kv)

Monthly Genertaion

Certificate issued by

GEDA

GJB 00265 Service:

Electrical energy

measurement

Tech. Def:

Energy Meter

Secure Meter

Ltd.


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Annex 5

Supportives


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IRR calculation


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Alembic Ltd IRR calculation without CDM

Wind Mills Financials

Basic Data/ Assumptions

Investment cost RsMill/MW

42.40 Purchase order, suzlon

Capacity MW 5 Purchase order, suzlon

No of WEG 4

Average PLF % 26.48% As guranteed by Suzlon-26.48%

Grid unavailability % 4.0% Suzlon proposal

Wheeling Charges % 4.0% Suzlon proposal and PPA

Transmission Losses (betweensubstation and WEG)

% 4.0% Suzlon proposal

O&M for first 4 years % 2.0% Purchase order, suzlonO&M from 4th year % 2.0% Purchase order, suzlon

Annual escalation in O&M after4 years

% 5.0% Purchase order, suzlon

Derating of equipment post 5thyears

% 5.0% Purchase order, suzlon

Working Capital (Days sale) Days 100

Depreciation rate 5.28% Depreciation

Tariff for power 3.67 Weightedaverage

cost ofpower;Given insuzlonproposal

Esclation 2.50% Per year

Minimum Alternative Tax rate 8.00% Balancesheet

ProfitStatement

Year 0 1 2 3 4 5 6 7 8

Power tariff 3.67 3.76 3.85 3.95 4.05 4.15 4.25 4.36

PowerGeneration

MillUnits

10.21 10.21 10.21 10.21 9.70 9.70 9.70 9.70

Free cash flowforecast

Rs Mill

Salesrealizations

Rs Mill 37.42 38.36 39.32 40.30 39.24 40.22 41.23 42.26

Less:

O&M, Insurance& others

Rs Mill 4.20 4.20 4.20 4.20 4.41 4.63 4.86 5.10

Depreciation(Availed forMAT)

Rs Mill 10.98 10.98 10.98 10.98 10.98 10.98 10.98 10.98

EBIT 22.24 23.18 24.14 25.12 23.85 24.61 25.39 26.18


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Interest 17.81 16.14 11.69 7.23 2.78 0.00 0.00 0.00

PBT 4.44 7.04 12.45 17.89 21.07 24.61 25.39 26.18

Tax (MAT) 0.35 0.56 1.00 1.43 1.69 1.97 2.03 2.09PAT 4.08 6.48 11.46 16.46 19.39 22.64 23.36 24.08

CummulativeP/L

4.08 10.56 22.01 38.47 57.85 80.50 103.86 127.94

Cash Flow

Year 0 1 2 3 4 5 6 7 8

OperatingCashflow

Rs Mill32.87 33.60 34.12 34.67 33.15 33.63 34.34 35.06

Less:

Increase inWorking Capital

Rs Mill10.25 0.26 0.26 0.27 (0.29) 0.27 0.28 0.28

Capital

Expenditure 212.00 - - - - - - - -

Free CashFlows toProject

Rs Mill(212.00)

22.62 33.34 33.86 34.40 33.44 33.36 34.06 34.78

IRR of Project 14.80%

InterestCalculations

Debt Opening 148.4 148.4 111.3 74.2 37.1 0.0

Debt Repayment 37.1 37.1 37.1 37.1

Interest 17.8 16.1 11.7 7.2 2.8

WorkingCapital

Working Capital 10.3 10.5 10.8 11.0 10.8 11.0 11.3 11.6

9 10 11 12 13 14 15 16 17 18 19 20

4.47 4.58 4.69 4.81 4.93 5.05 5.18 5.31 5.44 5.58 5.72 5.86

9.70 9.70 9.70 9.70 9.70 9.70 9.70 9.70 9.70 9.70 9.70 9.70

43.32 44.40 45.51 46.65 47.81 49.01 50.23 51.49 52.78 54.10 55.45 56.84

5.36 5.63 5.91 6.20 6.51 6.84 7.18 7.54 7.92 8.31 8.73 9.16

10.98 10.98 10.98 10.98 10.98 10.98 10.98 10.98 10.98 10.98 10.32 0.00

26.98 27.79 28.62 29.46 30.32 31.19 32.07 32.97 33.88 34.80 36.40 47.67

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

26.98 27.79 28.62 29.46 30.32 31.19 32.07 32.97 33.88 34.80 36.40 47.67

2.16 2.22 2.29 2.36 2.43 2.50 2.57 2.64 2.71 2.78 2.91 3.81

24.82 25.57 26.33 27.11 27.89 28.69 29.51 30.33 31.17 32.02 33.49 43.86

152.76

178.33

204.66

231.77

259.66 288.35 317.86 348.19 379.36 411.38 444.87

488.73


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9 10 11 12 13 14 15 16 17 18 19 20

35.80 36.55 37.31 38.09 38.88 39.68 40.49 41.31 42.15 43.00 43.81 43.86

0.29 0.30 0.30 0.31 0.32 0.33 0.34 0.34 0.35 0.36 0.37 0.38

- - - - - - - - - - - 14.40

35.51 36.25 37.01 37.78 38.56 39.35 40.15 40.97 41.80 42.64 43.44 29.08

11.9 12.2 12.5 12.8 13.1 13.4 13.8 14.1 14.5 14.8 15.2 15.6

Sensitivity Analysis based on PLF

Variation

5% 4% 3% 2% 1% 0 -1% -2% -3% -4% -5%

PLF 27.80% 27.54% 27.27% 27.01% 26.74% 26.48% 26.22% 25.95% 25.69% 25.43% 25.17%

IRR 15.70% 15.52% 15.34% 15.16% 14.98% 14.80% 14.61% 14.43% 14.25% 14.07% 13.89%

Project costdetails Rs mn

Comm. Loan amountProject (MWcapacity)

Towers

Date Disbursed

ProjectCost

5,00 1.25 x

4

22/12/00 148,40 212,00

Per MW CostMn 42,40

Project Cost Mn 212,00

Debt Mn 148,40

INTERESTRATE 12,00%

Weighted Average Cost of capital


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Alembic Ltd.(Rs. in Lacs)

Year 1999 2000 2001-022002-

03Period

(Months) 12 12 15 12

Return onShareholders Fund:

Equity ShareCapital 721 721 721 736

Reserves & Surplus 11,805 14,473 16,509 14,809Less RevaluationReserves (2,175) (2,159) (1,199) (995)

Total 10,351 13,035 16,031 14,550

AverageShareholders Fund(Op+Cl)/2 11,693 14,533 15,291

Profit forShareholders:

PAT 3,010 2,350 3,152Less: PreferenceDividend+CorpDiv.Tax - - -Profit forShareholders 3,010 2,350 3,152

Annualised Profitp.a. 3,010 1,880 3,152

Return onShareholders Fund% p.a.

25.74% 12.94% 20.61%

Net of Tax Cost ofBorrowings:


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Total Borrowings

Sch C + D 13,556 19,998 19,476 22,493

Total 13,556 19,998 19,476 22,493

AverageBorrowings(Op+Cl)/2 16,777 19,737 20,985

Total Interest Paid 2,603 3,325 2,457Bank Charges &Brokerages Paid 125 177 173

Total for period 2,728 3,502 2,630

Annualised InterestPaid p.a. 2,728 2,802 2,630

Rate of Avg.Interest p.a. %

16.26% 14.20% 12.53%

Less:ApplicableTax Rates % 8.475 7.650 7.875

Net of Tax InterestRate p.a.

14.88% 13.11% 11.55%

Assessment Yr. 2000-01 01-02 02-03 03-04Taxable

Income 30% of Book

Profit,Tax Rate35 % on

AboveBook Profit

+,


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+Surcharge

of 10 % &Nil

EducationTax.

Note asAbove 7.500 7.500 7.500

10.00%13.00% 2.00% 5.00%

0.975 0.150 0.375

8.475 7.650 7.875

0.00% 0.00% 0.00% 0.00%

- - - -

Total % - 8.475 7.650 7.875

Net ofTax Weight

Year 2000 Weight Int. Rate X Int. Rate

Equity+ Free Reserves (Average ) 11,693 0.41 25.74% 10.57%

Borrowings (Average ) 16,777 0.59 14.88% 8.77%

28,470 1.00 19.34%

Year 2001-02


Borrowings (Average ) 19,737 0.58 13.11% 7.55%

34,270 1.00 13.04%

Year 2002-03


Borrowings (Average ) 11.55% 6.68%


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20,985 0.58

36,275 1.00 15.37%

WACC 15.92%

- - - - -

PDD Alembic

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